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Vista Group Limited (VGL.ASX) reported their 1H FY25 results last week. From their presentation:
Metrics are all moving in the right direction. 1H is usually seasonally the weaker half so good to see good growth compared to pcp. 2nd consecutive quarter of FCF+ although I'll talk more about this below.
VGL are in the process of migrating their customers on to their new cloud offerings which should see more recurring revenue. They aim to be at 1600 sites by year end which would represent around 36% of their clients. Listening in on the call, they mentioned that they believe this process of migration will be a 5-10 year operation. Currently they do not have enough staff to meet the demand from their customers to complete the migration and are actively increasing their spend in order to meet demand. They believe in doing this extra spend they can make this process closer to a 5 year project rather than 10. However they are currently trying to balance being cash flow positive with spending extra to meet demand from clients. Personally I would be happy for them to have negative free cash flow if it means that they reach their 100% platform targets earlier.
Guidance was given for the full year perhaps on the weaker side with also a small downgrade to their projected ARR targets. Management mentioned that although ARR guidance is unlikely to be hit, the customer that was delayed will not affect revenue guidance too much. There was also a small increase to the aspirational ARR target with a new Embedded payments platform included in their cloud software. I'm not sure how much value this will add but time will tell. They also did mention that there was potential for them to branch into other entertainment businesses such as kids entertainment centres. They are already using their software for some clients who have both cinema and kids entertainment centre on the same site so they know that their software is compatible with these types of business'.
Overall I think the result was solid albeit with weak guidance which has hurt the share price slightly in the days since the report. However this is a business that is just hitting an inflection point and may see good profit growth for years to come. As long as the cinema industry keeps on keeping strong for the next few years.
Disc: Held IRL and on Strawman.
Vista Group Limited (VGL) reported their 1H earnings last week (they report on a calendar year basis). From their presentation:
The 1H results were impacted negatively by the writer's strike which also affected their non recurring revenue segments. As a result, full year revenue guidance was slightly downgraded although EBITDA margins were upgraded.
Listening in on the call, management have mentioned that they believe the guidance provided is on the more conservative side which may explain the recent broker upgrades and subsequent rise in share price since results were released. Couple that with a fairly illiquid stock and the share price has rocketed.
The slate of movies that have been announced is encouraging for the industry as a whole. And I would guide everyone to look at what was announced by just Disney in the past 2 weeks at San Diego Comic Con and D23 expo.
Of particular interest from the presentation was this slide which shows what they are targeting to achieve in terms of their cloud platform.
If Vista Group can deliver on these targets, then along with hitting an inflection point and operating leverage, could see the company become profitable again in FY25 and beyond. Management did say that at this point it gives the company options in terms of how it wants to continue the business long term and it was focused on hitting these targets first.
Disc: Held IRL and on Strawman.
Vista Group Limited (VGL) reported full year results last week. From their presentation (note figures are in NZD):
Total revenue hit guidance provided although it was slightly on the lower end. EBITDA was also very strong for the 2H finishing at $13.3m which was above analyst expectations of $12.5m. Likely driven by the strong 2H movie slate which included Barbie, Oppenheimer and the Taylor Swift Era's tour movie.
VGL are in the process of moving their clients onto their cloud offering and converting to a SaaS platform. Currently Saas revenue only represents around 30% of total revenue although close to 90% of revenue is recurring in nature. Listening in on the call it seems that most customers are favouring this transition to their cloud product although there has been some unexpected churn.
Outlook for FY24 was given:
Management expect stable expenses so expect EBITDA of around $25-30m for the year. Still unlikely to be profitable until FY25.
Disc: Held IRL and on Strawman.
Vista Group Limited reported their 1H FY23 results last week. From their report (note figures are in NZD):
Overall I thought the results were fairly disappointing although on the call management did say that they would be second half weighted (take with that what you want). This is a company that is trying to turnaround in an industry that has suffered massive headwinds in the last few years whilst at the same time also trying to convert their business into a full SaaS model.
I can see where management are coming from in terms of the 2nd half weighting given that the whole "Barbenheimer" movement didn't occur until July and so any boost in earnings from this event wouldn't be seen until the 2H of this year.
Analyst forecasts have total EBITDA of $12.5m for FY23 and this was asked of management on the call who kind of played a straight bat and said that "that's the analysts' job".
Outlook remains unchanged with FY23 revenue guidance of $142-$147m and the company expects to be free cash flow positive by Q4 FY24 (15 months away). The company burnt around $9m for the half so there should be enough cash to sustain them through towards Q4 FY24. Although there is also $18m of debt on the balance sheet.
Price action was a bit weird on the day of results with no trades going through on the ASX even though the shares trading on the NZX were hit hard. In the last week shares have come back around 17%
Disc: Held IRL and on Strawman.